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What is Financial Aid?

Financial aid covers the shortfall from what a student and his or her family may have saved up for college expenses and the actual cost of attending the college. Financial aid does not just cover the cost of tuition, but it can also cover the cost of books, school fees, and living expenses while attending college. The financial aid office at a university or college is responsible for coordinating the different types of aid that a student may receive to cover their shortfall in college costs. A financial aid officer will help the student find sources of financial aid and keep the student apprised of deadlines for such applications.

The financial aid package is comprised of all the different financial aid that the student is receiving from all sources that bridges the differential between what the student and family will be required to pay towards the student's college education and the actual costs of the institution.

What is the FAFSA?

FAFSA is the acronym for the Free Application for Federal Student Aid. You should have filled a form out for each academic year you were in school as an undergraduate student. Every student, whether undergraduate or graduate, is required to complete, sign, and file their FAFSA before the deadline for their school if they plan to have the opportunity to receive most financial aid or be awarded scholarships.

Learn About the Different Financial Aid Options

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What are the Different Types of Financial Aid?

  • Grants
    Grants do not have to be paid back. They are usually offered by state and federal government entities. Grants may be awarded based upon a student's merit, or they may be based upon financial need. The most common grant that students are awarded is the federal government's Pell grant. It is awarded to undergraduate students and is need-based. States also tend to administer need-based grant programs, such as the CAL Grant program in the state of California.

  • Scholarships
    Like grants, scholarships do not need to be paid back. The way in which they differ from grants is that institutions and private organizations, rather than the government, tend to offer these types of financial aid. Scholarships may be need-based, merit-based, or based upon the unique characteristics of the student, such as scholarships for women or scholarships for minorities.

  • Work Study
    This is a program in which the student receives financial aid in exchange for work. There is a federal work-study program that provides students jobs on their school campus in which the government will subsidize the student's work and fund the student's education in this manner. Such work might be at the school library, in a student center on campus, in the dormitory or residence areas, the cafeteria, or even in the athletic department.

  • Aid for the Military
    There are many different types of aid for students who are active duty, reserved personnel, veterans, or dependents and spouses of veterans. Some types of aid will provide students discounts on their tuition. Other types of aid will provide students with the costs of full tuition, books, fees, and even provide a living expense stipend. One of the most famous forms of aid for the military is the Tuition Assistance program. That program is a full-ride scholarship for members of the military that qualify. There is also the GI Bill that provides funds for education.

  • Federal Loans
    The federal government's two main student loan programs are the subsidized and unsubsidized loan programs. The former is provided for students with demonstrated financial need. The interest amounts are paid for by the government until the student is six months past their graduation date. In the unsubsidized program, interest accrues while the student is attending school as the loan funds are dispersed.

  • Private Loans
    This is the last source of financial aid that a student should pursue, but may be necessary to help you pay for college. Research different private loan options and programs to find the private student loan that fits your needs. Private loans can have higher interest rates than any type of federal government loan. Students may need to have family members co-sign in order to receive the loan because their credit score may preclude them from qualifying for the private loan on their own.

What are the Qualifications for Financial Aid?

The qualifications for financial aid depend upon the type of aid one is receiving. Need-based financial aid of any form usually requires the student to fill out all portions of the online FAFSA form. This form is provided by the federal government. Working in concert with financial aid offices of colleges around the country, FAFSA is the online federal government repository of information that makes a determination what resources the student and their family are expected to contribute towards their education. Based upon this information, financial aid offices and other providers of grants, loans, and scholarships that are need-based can make determinations on offers of financial aid.

Merit-based scholarship and grant qualifications will be based upon the requirements of the organization that is providing the funds. These can vary greatly.

If you are applying for financial aid to one of any of 300+ colleges and institutions that provide scholarships, you will need to fill out the CSS/Financial Aid Profile. This is not free, unlike the FAFSA online form. The CSS is administered by the College Board, the company that administers the SAT. The CSS takes longer than the FAFSA to fill out and will ask more questions about the family's assets.

Requirements for financial aid for the military will also vary greatly. You will need to consult either the scholarship provider, your recruiter, or your local Veteran's Administration office. Often, the requirements can be found online.

Where do I apply for Financial Aid?

If you are applying for any need-based financial aid, it is best to begin by filling out the free FAFSA form online because almost all state and federal loans and grants, most college financial aid offices, and some private scholarship providers require information from this form.

Then, you will need to go to the college where you have been accepted, armed with the expected family contribution figure from the FAFSA and speak with the financial aid officer. The financial aid officer will take your FAFSA information and guide you to financial aid sources that will help you meet your shortfall in covering the costs of your education. They will explain financial aid programs you can apply to and keep you aware of deadlines. They will apprise you of all of your rights and responsibilities as someone who is receiving financial aid. They will determine your eligibility for various financial aid programs and come up with a financial aid package to meet your college expenses.

How Does Financial Aid Work?

Many times, financial aid funds are sent to the college's financial aid office and disbursed from the Bursar's office. The timing of the distribution of funds will often be governed by federal and/or state law. For example, you may have to attend your college for two full weeks and demonstrate that you are attending classes and submitting your assignments before your federal student loan comes through.

A student can receive financial aid every year they are in college. Some grants, such as the Pell Grant and the CAL Grant, are designed to fund every year of a four-year program, as long as the student is making yearly progress toward their education according to government guidelines. Some scholarships are for only one year, but others are for a four-year program, funding each year.

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How Do I Apply - Step by Step

  • Get a FAFSA ID number - You cannot fill out the FAFSA form without an identification number. If your parent is required to contribute to your education, he or she will need to apply for a free FAFSA ID as well.
  • Fill out the online FAFSA form - You will need to have on hand your prior year tax forms in order to supply information. You will need to fill out the FAFSA every year that you are attending college. You and your parent, if you are not an independent student, will need to sign the FAFSA, using the FAFSA ID number.
  • Ensure your FAFSA form has no errors.
  • Have the FAFSA information sent electronically to the school that has accepted you – That is part of the FAFSA process and is contained in the online application.
  • Apply for your state's grant program, if one exists, using the FAFSA information.
  • Look for other sources of scholarships, if needed.
  • Fill out the CSS profile, if your institution requires it.
  • Have an appointment with the financial aid officer at your college regarding a financial aid package.
  • When you receive your financial aid award letter from your college, examine it to see if you still have unmet need.
  • If your financial aid still does not cover your expected expenses, you will need to speak to your financial aid officer at your school about applying for federal student loans. Your financial aid officer will be able to direct you to the federal loans that you qualify for.
  • Only after all other methods of financial aid are exhausted, should one seek private student loans. They can have exorbitant interest rates.

How is Financial Aid Different from a Scholarship?

Financial aid is the full package of different types of assistance that can help you bridge the shortfall from your expected family contribution to the full cost of attending your college. Financial aid can include scholarships, grants, loans, tuition discounts, and work-study opportunities. Scholarships are only one form of financial aid, whereas financial aid is the full package of assistance that will allow you to meet all of your education costs. Financial aid packages can include scholarships and grants that do not have to be repaid as well as loans that will need to be paid back after graduation.

What are the Deadlines?

You can apply for both the FAFSA and the CSS Profile from October 1 each year. The FAFSA can be filled out until June 30, but you will likely not want to wait until that date. You will need to find out your college's financial aid priority deadline and have the FAFSA and CSS filled out in advance. The FAFSA can take up to a week to send their results to your desired college, so you must fill out the FAFSA in advance of this deadline.

One additional glitch can occur with the FAFSA if it elicits a review. A review is a process in which the government may request additional, clarifying information from the student and/or their parents about their financial situation. This can take some time to resolve and may entail submitting notarized information, so it is best to not wait until one week before your school's priority financial aid deadline in order to submit the FAFSA. Get it done early so you can avoid unnecessary delays.

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Eligibility & Staying Eligible for Financial Aid

If you are receiving federal aid of any kind, grants or loans, you are required to maintain satisfactory progress, based upon strict federal guidelines, towards graduation. This will include grades, full-time status and attendance. You will need to fill out the FAFSA yearly. If you have private scholarships that renew, you will need to be aware of the deadlines for renewal applications. Students must retain their U.S. citizenship or eligible non-citizen status.

In addition to satisfactory academic progress, Title IV program funds, which are any form of federal financial aid, have requirements having to do with the number of units in the program that constitute full-time student status and attendance.

Regaining Eligibility

Students can regain eligibility after losing satisfactory academic progress. The federal government guidelines do permit schools some leeway in deciding when to restore eligibility for federal financial aid. In some cases, students are allowed to retake classes failed and receive financial aid for retaking the class. In other cases, students must show that there was some mitigating situation that caused the student to drop a class or stop attending for a semester, such as having a serious illness. Each school has different policies, so you must consult your academic and financial aid officers.

Graduate School

As a graduate student, you do still have the option to fill out a free application for federal student aid (FAFSA) each year if you want financial aid. Will you be able to qualify for need-based aid or will it be solely based on merit?

Graduate can submit a FAFSA annually, though those attending particularly expensive colleges, such as those for law or medical degrees still tend to borrow higher amounts than those who attend other grad or doctoral programs. You can expect a few changes in your filing process now that you’re a graduate student. Also, you will no longer retain eligibility for certain forms of aid, such as the Pell grant, but you can still qualify for work study funds and scholarships.

Graduate students are considered to be independent students. That is, they don’t rely on their parents or guardians for any financial assistance. An independent student is defined as a student working on a degree beyond a bachelor’s; a parent who pays the majority of financial support for their dependents; Married or separated, but not divorced; at least 24 years old; a veteran or currently in the Armed Forces; been a ward of the court, in foster care, or an orphan at any point after 13 years of age; emancipated as a minor, as determined by a court judge; or a homeless youth or at risk of becoming homeless, as determined by HUD.

What’s Different About Completing the FAFSA for Graduate School vs. Undergrad?

Section Three of the FAFSA asks several questions of the students filling out the form in order to determine if they are independent students; if you answer six of these questions or more with a “yes”, the Department of Education (DOE) will consider you to be an independent student.

If an undergraduate student answers any of these questions with a “yes”, they will be classified as independent students as well. For both graduate and undergraduate students, this classification means that the requirements for parental information in their FAFSA are waived.

All of this has implications for your future access to funding from federal aid. Graduate students are primarily eligible to cover the cost of school with federal and private student loans. The financial aid graduates have access to include the Federal Direct Stafford Unsubsidized Loan, and the Grad PLUS Loan. This second loan is credit-based, which means, if your credit report indicates any issues, you may need a co-signer to get approval.

To apply for federal student financial aid, you need to meet several conditions including be a US citizen or legal resident; hold a legal Social Security Number; register with the Selective Service (male, between 18 and 25); be in attendance full- or half-time to an accredited educational program that can receive federal aid services; keep your grades up; stay current on previous student loans; have not borrowed the maximum aggregate limit on student loans.

How to Complete Your FAFSA for Grad Students

As a graduate student, you should already have some experience in filling out and applying for your annual FAFSA, though some changes are occasionally made to the application process and to the form itself. Before you begin filling out the form, you have to have an FSA ID. This allows you to electronically sign your FAFSA. It takes several days for the DOE to verify your request for an FSA ID. Until you receive yours, you won’t able to fill your FAFSA out, renew it, or sign your application online so you know your funding options.

However, now that you are an independent student, you don’t have to obtain your parents’ tax information. This means they don’t have to obtain an FSA ID, which may shorten the process for you.

Navigate to the FAFSA site ( and search for the FAFSA. Even though you have filled a form out annually since you applied your first time, read and follow the instructions carefully; some information and instructions may have changed. Decide which form you need to complete. Each one is designated by academic year. If you already know you’ll be in school during both academic years, fill out the academic form for the first year and then, once it has processed, you can fill out the academic form for the later year.

Don’t forget to create a save key. This is a temporary password allowing you to save your application and complete filling it out at a later time.

If you are new to filling out your FAFSA, complete the Student Demographics area (name, date of birth, and other information. Input your information just as it shows on your Social Security card. Make sure you complete all the steps.) As a graduate student, you don’t need to worry about this.

If you haven’t started graduate school yet, include each school you’re considering attending. The information will be sent by email to your school of choice (or a list of schools you are considering); this applies even if you haven’t been accepted or applied yet. If a school decides not to accept you, the FAFSA form will be disregarded. If you choose a new school, you can remove schools you included earlier.

Answer each question in Section Three - the dependency status section. You’ll see questions about different areas of your life so that the DOE will be able to determine whether you are a dependent student or an independent one. As a graduate student, you are much more likely to be independent. Congress established the dependency guidelines, which are nothing like those the IRS uses. As an example, you may still be classified as a dependent student, even if you receive no help or income from your parents for bills and don't share a home with your parents.

Step 6 requires parents of dependent students to fill out the Parent Demographics section. In the next step, you’ll input your financial information. The FAFSA has an IRS Data Retrieval Tool which makes it much easier for you to obtain this information. You’ll sign your FAFSA electronically using your FSA ID. This is the quickest signature method because it allows your application to be processed much faster.

Why File for FAFSA Early?

Filing deadlines have changed in recent years. The 2020-2021 form is to be filed by the first of October in 2021. However, different schools have different filing deadlines, both private and public, so be careful to check with your school’s Financial Aid office for the deadline of your school. You want to have your FAFSA submitted before then.

Financial aid is decided on and distributed on a “first-come, first-served” basis. This means that the earlier you apply, the more likely you are to receive a larger financial aid package. It’s important to file early so the agency has time to analyze your application and send results to your school. Even if you haven’t requested admission to a particular school, you should apply for financial aid.

As soon as the FAFSA is available in the current academic year, you should start to fill it out. Each university and state can run out of financial aid money early, not to mention late fees may be applied.

What Types of Aid is Available to Graduate Students?

Graduate students are eligible for several types of financial aid. These include direct aid, which is given straight to the student. A stipend, which is part of a scholarship or fellowship on a specific campus, is one example of this type of aid.

Another type of aid is indirect aid. Indirect aid includes health insurance, tuition, and fee subsidies. You may qualify for federal work-study or assistantships (research or teaching), which also provide financial assistance.

Graduate scholarships, which you must apply for separately from your FAFSA, are another form of financial aid. The Federal Direct Unsubsidized Loan (up to $20,500 aggregate) is also available. Awards are based on merit such as block grants, fellowships, stipends, and scholarships are another form of aid. Depending if your federal loan is subsidized or not, interest will accrue at varying rates.